Minnesota · 2026 employer costs
How much does an employee cost in Minnesota?
Minnesota withholds state income tax from employee pay, but that's not an employer cost. What actually lands on the employer side is federal Social Security and Medicare plus Minnesota's own unemployment insurance rate and wage base. Below is a 2026 estimate for a $60,000 hire, and the full calculator to run your own numbers.
A $60,000 Minnesota employee costs about
$65,380
in mandatory employer costs alone — before any optional benefits. SUI is estimated at the 1% statutory minimum; your industry rate may be higher.
- New-employer SUI: set from your industry's average rate, at least 1%, on the first $44,000 of wages — there's no single new-employer rate.
- Other employer-paid state charges: MN Workforce Development Fee at 0.1% up to $44,000; MN Paid Leave (employer share) at 0.44% up to $185,000.
- Standard FUTA rate applies: 0.6% — this state is not projected to face a federal credit reduction for 2026.
- State income tax is withheld from the employee's wages, not paid directly by the employer.
- These rate rules were checked directly against the MN DEED Unemployment Insurance; M.S. 268.051, current as of 2026-09-23.
Minnesota assigns new employers their industry's average experience rate plus the 2026 base tax rate (0.4%) and a 14% additional assessment on that amount, with a legal minimum of 1%. The calculator uses that 1% floor unless you enter the rate on your DEED notice.
What you’d pay this person — before taxes or benefits.
Used only for employer-size rules. The estimate below is for one new hire.
Set by your industry average. Minimum 1%. Left blank, that minimum is used.
Health insurance, 401(k) match, bonus, and more. Off by default.
2026 calculation assumptions▾
Source: SSA / IRS
Source: IRS
Source: IRS / U.S. Dept. of Labor
Minnesota assigns new employers their industry's average experience rate plus the 2026 base tax rate (0.4%) and a 14% additional assessment on that amount, with a legal minimum of 1%. The calculator uses that 1% floor unless you enter the rate on your DEED notice.
A separate 0.10% special assessment on UI-taxable wages, collected with your unemployment tax but not part of the SUI rate.
Source: M.S. 116L.20
The 2026 premium is 0.88% of wages up to the Social Security limit (DEED lists $185,000). Employers may deduct up to 0.44% from employees, so the employer's legal minimum is 0.44% — or 0.22% for employers DEED designates as small (30 or fewer employees and an average wage at or under 150% of the state average). Employers may choose to pay more.
Source: MN DEED Paid Leave; M.S. 268B.14
This estimate assumes your business is a new employer (not yet experience-rated) for unemployment insurance purposes. An established business’s actual SUI rate may be higher or lower depending on its claims history. “Current employees” is used only to check headcount-based thresholds (paid sick leave tiers, the ACA’s 50-employee mark) — it doesn’t change the tax rates themselves.
*Statutory minimum — your industry rate may be higher
Reverse the question
Not “what will it cost?” — what can I afford?
Enter what your business can put toward one new hire each month, all-in. We’ll work backward through MN payroll taxes to the highest salary it supports.
Estimated affordable salary
$77,226
per year
Minnesota hiring guide
What makes hiring in Minnesota different?
Minnesota doesn't publish one unemployment insurance (UI) rate for new businesses. For roughly your first two years, DEED assigns you the average experience rating of your industry, identified by the first two digits of your NAICS code (five digits for construction). It then adds the 2026 base tax rate of 0.4% and a 14% additional assessment on that amount. State law sets a floor: a new employer's rate can't be lower than 1%. Two companies registering the same week can end up with very different rates if one writes software and the other installs roofs.
Whatever your rate, it applies only to the first $44,000 each employee earns in 2026. Minnesota ties that wage base to 60% of the state's average wage, so expect it to change from year to year.
Two more employer charges sit next to UI tax:
- Workforce Development Fee: 0.10% of the same $44,000 of taxable wages. It's set by a separate statute and collected with your UI tax, but it isn't part of the UI rate itself.
- Minnesota Paid Leave: new for 2026. Premiums started January 1, 2026, at 0.88% of each employee's wages up to the Social Security limit (DEED lists $185,000). Employers may deduct up to 0.44% from employees' pay, so at least 0.44% is the employer's own cost. Employers can choose to pay more.
Small employers and Paid Leave
DEED gives some businesses a lower Paid Leave premium of 0.66%. Employees can still be charged up to 0.44%, which leaves the employer's minimum share at 0.22% instead of 0.44%. To qualify for 2026, a business needed 30 or fewer employees in every quarter from October 1, 2024, through September 30, 2025; an average wage no higher than 150% of the statewide average ($27,745.88 per quarter); and every quarterly wage detail report filed for that period. DEED decides the designation, not the employer, and a business that disagrees can appeal.
Minnesota employer costs in 2026
For a Minnesota hire, the calculator adds employer Social Security and Medicare, federal unemployment (FUTA), state UI tax, the Workforce Development Fee, and the employer's share of Paid Leave, each on its own line.
The UI line is the one to check. If you leave the SUI rate field blank, the calculator uses the 1% legal minimum. That's the lowest rate any new employer can get, and many industries will be higher. Each extra percentage point adds $440 a year per employee earning $44,000 or more. Enter the rate from your DEED notice to replace the estimate.
For Paid Leave, the calculator uses the 0.44% employer minimum, or 0.22% if you tick the small-employer box. Only tick it if DEED has designated your business. If you choose to cover your employees' share as well, your real cost can reach the full 0.88%. The calculator doesn't model that choice.
Official sources
- Minnesota DEED — Update on 2026 UI Rate Factors (briefing to the Minnesota House, March 10, 2026)
- Minnesota Legislature — Minn. Stat. § 268.051 — Employer taxes and reimbursements
- Minnesota Legislature — Minn. Stat. § 116L.20 — Workforce development fund
- Minnesota DEED — Paid Leave — Small employer premium rate designation
- Minnesota Legislature — Minn. Stat. § 268B.14 — Paid leave premiums
Last verified: September 23, 2026